Professionals Real Estate 
One of the more significant trends in the Western Australian property market over the past year has been a growing trend for young people to buy an investment property as their first home rather than an owner occupier property according to Shane Kempton, CEO of Professionals Real Estate Group.
Mr Kempton said that recent State Government changes to the First Home Owners Grant had encouraged this trend.
“First homebuyers of established properties were hit in the last State Budget, with the stamp duty levy threshold lowered from $500,000 to $430,000. Stamp duty is not levied in WA on the first $500,000 spent on a first home purchase, but the threshold has now dropped to $430,000. In addition, this change followed the slashing of the First Home Owner Grant for people wanting to buy established properties by more than half to $3000 by the State Government.”
“With less financial incentives for first home buyers to own an owner occupier home, more young people are choosing to purchase their first home as an investment with the view to either moving into at a later stage or sell it for a profit and use the proceeds as a deposit to buy another home. These first home buyers are also purchasing investment properties as their first home because they are finding that the rental income can cover a significant portion of the mortgage repayments due to very low interest rates. In addition, people buying an investment property as their first home as opposed to an owner occupier home, can qualify for major tax benefits such as negative gearing and depreciation.”
“Buying an owner occupier home does not quality a first for home for tax benefits while buying an investment property can generate significant tax savings. Depreciation, for example, is a legislative allowance introduced by the Australian Tax Office (ATO) that allows property investors to claim back the decrease in value of their properties and fittings. Tax benefits obtained through obtaining an ATO complainant tax depreciation report can be equivalent to 60% of the total purchase price of the property. These depreciation benefits combined with negative gearing means that a first home buyer could buy a home with little out of pocket expenses after locking in very low fixed interest rates currently being promoted by the banks.”
“Professionals are finding that these first home buyer investors are in their twenties and live at home with their parents. There parents generally provide security in their own property for the purchase of their children’s investment properties as they understand that it is an effective way of helping their kids get their first step on the property ladder.”
“Anyone considering buying their first home as an investment should consult their financial advisor before making a final decision to purchase,” he said.
